If the target bonus is fully achieved, the ratio of salary and variable compensation (bonus) is approximately 20: 80%.

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1 Compensation Report The following section describes the principles relating to the compensation of the Board of Management and the stipulations set out in the statutes relating to the compensation of the Supervisory Board. In addition to discussing the compensation system, the com ponents of compensation are also disclosed in absolute figures. Furthermore, the compensation of each member of the Board of Management and the Supervisory Board for the financial year 2010 is disclosed by name and analysed into components. 1. Compensation of the Board of Management Responsibilities; approval by shareholders in 2010 The Supervisory Board is responsible for determining and regularly reviewing the Board of Management s compensation. The Personnel Committee plays a preparatory role in this process. The compensation system in place for the Board of Management for the financial year 2010 was approved by shareholders at the Annual General Meeting 2010 as part of a consultative process ( Say on Pay ) with a majority vote of 97.66%. Principles of compensation The compensation structure is designed to promote sustainable business development. At the same time, the compensation model used for the Board of Management should be attractive in the context of the competitive environment for highly qualified executives. All compensation components should be appropriate, both individually and in total, and should not encourage the Board of Management to take on inappropriate risks for the company. The compensation of members of the Board of Management is determined by the full Supervisory Board on the basis of performance criteria and after taking into account any remuneration received from Group companies. The Supervisory Board sets demanding and relevant targets as the basis for variable compensation. The principal criteria for determining the appropriateness of compensation are the nature of the tasks allocated to each member of the Board of Management, an assessment of the performance of those tasks, the economic situation, the performance and future prospects of the BMW Group as well as comparable levels of compensation in the relevant sector and the compensation structure in place elsewhere within the organisation. Variable compensation in the form of corporate related earnings- and performance-related bonus is based on a period stretching over several years, during which both positive and negative developments are taken into account. The Personnel Committee and the Supervisory Board engaged external experts to test the compatibility of the compensation system in place in 2009 with the Act on the Appropriateness of Management Board Remuneration (VorstAG). The understanding gained in that process was taken into account in amended contracts agreed on mutual terms with all members of the Board of Management with effect from 1 January The Supervisory Board reviews the compensation system at regular intervals, with regard to both the structure and amount of the compensation of the Board of Management. The Personnel Committee also makes use of remuneration studies. Recommendations made by an independent external remuneration expert and suggestions made by investors and analysts are also considered in the consultative process. The Supervisory Board also con siders the compensation structures and the levels of compensation of staff and managers within the BMW Group. Compensation system, compensation components The compensation of the Board of Management comprises both fixed and variable remuneration. In terms of the overall compensation of current members of the Board of Management, the Supervisory Board sets a compensation target and a compensation framework with a high variable proportion, taking into account the overall situation and forecasts of the BMW Group. Contracts with members of the Board of Management signed before 1 January 2010 contain a performance-related fixed amount (defined benefit). In certain circumstances, Board of Management members are entitled under contracts signed before 1 January 2010 to receive so-called transitional payments until their retirement. Fixed remuneration comprises a base salary (paid monthly) and other remuneration elements. Other remuneration elements comprise mainly the use of company cars as well as the payment of insurance premiums, contributions towards security systems and an annual medical check-up. The salary of each member of the Board of Management is euro 420,000 p. a. during the first term of appointment and euro 480,000 p. a. from the beginning of the second term. The salary of the Chairman of the Board of Management is euro 840,000 p. a. The variable compensation of the Board of Management (bonus) is made up of two components, each equally weighted, namely a corporate earnings-related bonus and a personal performance-related bonus. The Supervisory Board may also, in justified cases, decide to pay an additional special bonus on a voluntary basis. The target

2 bonus (100%) for a Board of Management member (i.e. covering both components of variable compensation) totals euro 1.5 million p. a. for the first term of appointment and euro 1.75 million p. a. with effect from the second. The equivalent figure for the Chairman of the Board of Management is euro 3 million p. a. Upper limits for the amount of the bonus are in place for all Board of Management members (150% of the relevant target bonus). The total target compensation for a Board of Management member (i.e. salary and target bonus) is therefore euro 1.92 million p. a. for the first term of appointment and euro 2.23 million p. a. with effect from the second. The equivalent figure for the Chairman of the Board of Management is euro 3.84 million p. a. If the target bonus is fully achieved, the ratio of salary and variable compensation (bonus) is approximately 20: 80%. The corporate earnings-related bonus is based on the BMW Group s net profit and post-tax return on sales (which are combined in a single earnings factor) and the level of the dividend (common stock). The corporate earnings-related bonus is derived by multiplying the target amount fixed for each member of the Board of Management by the earnings factor and by the dividend factor. In exceptional circumstances, for instance when there have been major acquisitions or disposals, the Supervisory Board may adjust the level of the corporate earnings-related bonus. An earnings and dividend factor of 1.00 gives rise to an earnings-based bonus of euro 0.75 million for a member of the Board of Management during the first period of appointment and one of euro million during the second period of appointment. The equivalent bonus for the Chairman of the Board of Management is euro 1.5 million. The earnings factor is 1.00 in the event of a Group net profit of euro 3.1 billion and a post-tax return on sales of 5.6%. The dividend factor is 1.00 in the event that the dividend paid on the shares of common stock is between 100 and 110 cents. If the Group net profit is below euro 1 billion or if the post-tax return on sales is less than 2%, the earnings factor will be zero. In these cases, no corporate earningsrelated bonus will be paid. Based on the principle of consistency, this rule is also applicable in determining the corporate earnings-related variable compensation components of all managers and staff of BMW AG. The personal performance-related bonus is derived by multiplying the target amount set for each member of the Board of Management by a performance factor. The Supervisory Board sets the performance factor on the basis of its assessment of the contribution of the relevant Board of Management member to sustainable and longterm oriented business development. In setting the factor, consideration is given equally to personal performance and decisions taken in previous forecasting periods, key decisions affecting the future development of the business and the effectiveness of measures taken in response to changing external conditions as well as other activities aimed at safeguarding the future viability of the business to the extent not included directly in the basis of measurement. The target bonus and the key figures used to determine the corporate earnings-related bonus, have been fixed for a period of three financial years, during which time target bonus and the key figures may not be amended retrospectively. As in previous years, the compensation system for 2010 does not include any stock options, value appreciation rights or other share-based components incorporating other long-term incentives. The Supervisory Board did, however, decide in December 2010 to add a further component to the compensation system for financial years from 1 January 2011 onwards, requiring Board of Management members to invest the equivalent of 20% of their total bonuses (after tax) for financial years from 2011 onwards in BMW common stock and to hold these shares for a minimum of four years. One half of the amount required to finance this investment will be provided by the Company. As part of a matching plan, the Board of Management members will, at the end of the holding period, receive from the Company either one additional share of common stock or an equivalent cash amount for three shares of common stock held, to be decided at the discretion of the Company. The new requirement is aimed at creating further long-term incentives to encourage sustainable governance. The Supervisory Board carries out an annual review of the appropriateness of the total compensation of the Board of Management. In horizontal terms, this is done by comparing compensation paid by DAX-30 companies and, in vertical terms, by comparing board compensation with the salaries of senior management (below board level) and with the average salaries of employees. With effect from financial years beginning on or after 1 January 2010, the provision of retirement and surviving dependants benefits for existing and future members of the Board of Management was changed to a defined contribution system with a guaranteed minimum return (similar to the switch to a defined contribution system for middle and senior management in 2009). Given the fact that board members already have a legal right to

3 receive the benefits already promised to them, they have been given the option to choose between the previous system and the new one. No changes were made to existing arrangements in In the event of the termination of mandate, current members of the Board of Management are entitled to receive certain defined benefits in accordance with the pension scheme rules. Pensions are paid to former members of the Board of Management who have either reached the age of 65 or, if their mandate was terminated earlier and not extended, to members who have either reached the age of 60 or who are unable to work due to ill-health or accident, or who have entered into early retirement in accordance with a special arrangement. The amount of the pension is unchanged from the previous year and comprises a basic monthly amount of euro 10,000 or euro 15,000 (Chairman of the Board of Management) plus a fixed amount. The fixed amount is made up of approximately euro 75 for each year of service in the company before becoming a member of the Board of Management plus between euro 400 and euro 600 for each full year of service on the board (up to a maximum of 15 years). Pension payments are adjusted by analogy to the rules applicable for the adjustment of civil servants pensions: the pensions of members of the Board of Management are adjusted when the civil servants remuneration level B6 (excluding allowances) is increased by more than 5% or in accordance with the Company Pension Act. If a mandate is ended early, before the member of the Board of Management reaches the age of 60, a transitional payment amounting to two-thirds of the pension theoretically earned up to the date when a full pension can be drawn may become payable if, after a minimum of three years of service as a member of the Board of Management, this is considered appropriate on the basis of an objective evaluation of all circumstances. Arrangements are in place concerning the offsetting of other income against pensions and transitional payments. If a mandate is terminated after 1 January 2010, the new system provides entitlements which can be paid either (a) in the case of death or invalidity as a one-off amount or over a maximum of ten years or (b) on retirement depending on the wish of the ex-board member concerned in the form of a life-long monthly pension, as a one-off amount, over a maximum of ten years, or in a combined form (e.g. a combination of a one-off payment and a proportionately reduced life-long monthly pension). Pensions are paid to former members of the Board of Management who have either reached the statutory retirement age for the state pension scheme in Germany or, if their mandate had terminated earlier and had not been extended, to members who have either reached the age of 60 or are permanently unable to work, or who have entered into early retirement in accordance with a special arrangement. In addition, following the death of a retired board member who has elected to receive a lifelong pension, 60% of that amount is paid as a life-long widow s pension. The amount of the retirement pension to be paid is determined on the basis of the amount accrued in each board member s individual pension savings account. The amount on this account arises from annual contributions paid by the Company plus interest earned based on the type of investment. The annual contribution to be paid for each member of the Board of Management amounted to euro 240,000 for 2010, euro 270,000 for 2011 and euro 300,000 from 2012 onwards. The equivalent figures for the Chairman of the Board of Management are euro 425,000, euro 475,000 and euro 525,000. The contributions are credited, along with interest earned, to the personal savings accounts of board members in monthly amounts. The guaranteed minimum rate of return p. a. corresponds to the maximum interest rate used to calculate insurance reserves for life insurance policies (guaranteed interest on life insurance policies). In the case of invalidity or death, a minimum of 60% of the potential annual contributions will be paid until the person concerned would have reached the age of 60. At the changeover to the new system, current members of the Board of Management were credited with a starting balance of equivalent value to any entitlements already vested. The starting balance and all contributions subsequently credited to board members under the new scheme have been externally financed in conjunction with a trust model that is also used to fund pension obligations to employees. Pensions are increased annually by an amount of at least 1%. Income earned on an employed or a self-employed basis up to the age of 63 is offset against the pension entitlement. In addition, certain circumstances have been specified, in the event of which, the Company no longer has any obligation to pay benefits. In such cases, no transitional payments will be made either. Retired board members are entitled to use company and lease vehicles in line with the rules applicable for senior heads of departments.

4 If a board member s mandate is terminated early without important reason, there are no contractual commitments to pay compensation. Similarly, there are no commitments to pay compensation for early termination in the event of a change of control or a takeover offer. No members of the Board of Management received any payments or benefits from third parties in 2010 on account of their activities as members of the Board of Management of BMW AG. Overview of compensation system and compensation components Component Parameter / measurement base Salary Variable compensation Bonus: (if target is 100% achieved, the ratio of salary and bonus will be approximately 20 : 80) a) Corporate earnings-related bonus (corresponds to 50 % of target bonus if target is 100 % achieved) b) Performance-related bonus (corresponds to 50 % of target bonus if target is 100 % achieved) Share-based compensation components Special bonus payments Other remuneration Member of the Board of Management: euro 420,000 p. a. (first term of appointment) euro 480,000 p. a. (from second term of appointment onwards) Chairman of the Board of Management: euro 840,000 p. a. Target bonuses (if target is 100 % achieved): euro 1.5 million (first term of appointment) euro 1.75 million (from second term of appointment onwards) euro 3.00 million (Chairman of the Board of Management) Quantitative criteria fixed in advance for a period of three financial years Formula: 50 % of target bonus x earnings factor x dividend factor (common stock) the earnings factor is derived from the Group net profit and the Group post-tax return on sales Corridor: % * (fixed upper limit) Primarily qualitative criteria, expressed in terms of a performance factor aimed at measuring the board members contribution to sustainable and long-term performance and the future viability of the business Formula: 50 % of target bonus x performance factor Other criteria for performance factor: innovation (economic and ecological, e.g. reduction of CO 2 emissions), leadership skills and attractiveness as employee, corporate social responsibility, progress in implementing diversity concept Corridor: % * (fixed upper limit) introduction planned for financial years from 1 January 2011 onwards requirement for board members to invest 20 % of their total bonuses (after tax) for financial years from 1 January 2011 onwards in BMW AG common stock one half of the amount required to finance this investment to be provided by Company. minimum holding period of four years at the end of the holding period, board member receives either one additional share or an equivalent cash amount (at option of Company) May be paid in justified circumstances on appropriate basis, no entitlement Contractual agreement, main points: use of company cars, insurance premiums, contributions towards security systems, medical check-up Compensation entitlements on termination of contract, compensation entitlements in event of change of control or takeover bid No contractual entitlements Retirement and surviving dependants benefits Model Principal features a) Defined benefits (only applies to board members appointed for the first time before 1 January 2010; based on legal right to receive the benefits already promised to them, this group of persons is entitled to opt between (a) and (b)) b) Defined contribution system since 1 January 2010 with guaranteed minimum rate of return Pension of base amount of euro 10,000 (Chairman: euro 15,000) plus fixed amounts based on length of company and board service, in certain circumstances transitional payments Pension based on amounts credited to individual savings accounts for contributions paid and interest earned Annual contribution for board member (Chairman) for 2010: euro 240,000 (euro 425,000) for 2011: euro 270,000 (euro 475,000) for financial year 2012 and thereafter: euro 300,000 (euro 525,000) Various forms of disbursement No transitional payments * Upper limit for financial year 2011 and thereafter will increase to 250 %.

5 Compensation of the Board of Management for the financial year 2010 (total) The total remuneration of the current members of the Board of Management of BMW AG amounted to euro 18.2 million (2009: euro 10.7 million). The amount comprises fixed components (including other remuneration) of euro 3.7 million (2009: euro 3.7 million) and variable components of euro 14.5 million (2009: euro 7.0 million). The composition of the Board of Management was unchanged in 2010 compared to the previous year. The rules determining the level of board members salaries remained unchanged during the financial year 2010; differences in salaries compared to the previous year resulted from the timing of appointment periods. Other remuneration decreased due to the lower level of fringe benefits paid in the year under report. Variable remuneration includes special bonus payments amounting to euro 770,000 (2009: ) (euro 100,000 per board member, euro 170,000 to the Chairman). The Supervisory Board authorised these amounts in the context of the special bonus payments to employees of BMW AG, based on the principle of consistency and taking into account senior management compensation (below board level). This was in recognition of the fact that the Board of Management has undertaken structural measures that have made it easier for the BMW Group to overcome the economic and financial crisis. in euro million Amount Proportion Amount Proportion in % in % Fixed compensation Variable compensation Total compensation In addition, an expense of euro 0.9 million (2009: euro 0.7 million) was recognised in the financial year 2010 for current members of the Board of Management for the period after the end of their service relationship. This relates to the expense for allocations to pension provisions (service cost). Compensation of the individual members of the Board of Management for the financial year 2010 (2009) in euro Fixed compensation Variable Compensation Other compensation * Total Salary compensation Total Norbert Reithofer 840,000 17, ,716 3,438,500 4,296,216 (840,000) (16,215) (856,215) (1,725,000) (2,581,215) Frank-Peter Arndt 480,000 21, ,529 2,006,625 2,508,154 (440,000) (23,591) (463,591) (910,417) (1,374,008) Herbert Diess 435,000 18, ,944 1,802,344 2,256,288 (420,000) (13,773) (433,773) (862,500) (1,296,273) Klaus Draeger 480,000 20, ,016 2,006,625 2,506,641 (430,000) (74,237) (504,237) (886,458) (1,390,695) Friedrich Eichiner 435,000 24, ,747 1,802,344 2,262,091 (420,000) (93,785) (513,785) (862,500) (1,376,285) Harald Krüger 420,000 20, ,473 1,734,250 2,174,723 (420,000) (78,028) (498,028) (862,500) (1,360,528) Ian Robertson 420,000 13, ,987 1,734,250 2,168,237 (420,000) (54,993) (474,993) (862,500) (1,337,493) Total 3,510, ,412 3,647,412 14,524,938 18,172,350 (3,390,000) (354,622) (3,744,622) (6,971,875) (10,716,497) * Variable remuneration for the financial year 2010 includes special bonus payments of euro 100,000 per board member (Chairman: euro 170,000).

6 Pension benefits in euro Allocated to Present value of Present value of Balance on pension pension provisions in pension obligations pension obligations accounts at financial year (defined benefit plans), (defined benefit plans), (defined benefit plans) 2 in accordance with IFRS 2, 3 in accordance with HGB 2 Norbert Reithofer 168,018 4,393,600 4,092,763 3,493,226 (131,815) (3,583,214) (3,583,214) ( ) Frank-Peter Arndt 94,937 2,972,820 2,769,243 2,389,511 (73,233) (2,440,806) (2,440,806) ( ) Herbert Diess 123,733 2,079,474 1,915,385 1,646,141 (93,685) (1,619,404) (1,619,404) ( ) Klaus Draeger 95,435 2,736,323 2,539,567 2,226,217 (74,495) (2,223,687) (2,223,687) ( ) Friedrich Eichiner 109,474 2,931,281 2,741,092 2,340,081 (86,612) (2,406,328) (2,406,328) ( ) Harald Krüger 70,062 1,570,426 1,408,702 1,213,803 (51,300) (1,187,492) (1,187,492) ( ) Ian Robertson 238, , , ,713 (189,682) (381,011) (381,011) ( ) Gesamt 2 900,243 17,398,588 16,127,703 13,841,692 (700,822) (13,841,942) (13,841,942) ( ) 1 Corresponds to service cost in accordance with IFRS. 2 Based on legal right to receive the benefits already promised to them, current board members were given the option of choosing between the old and new models at the time the Company changed from a defined benefit to a defined contribution system. 3 Defined benefit obligations (DBO) The amount paid to former members of the Board of Management and their dependants was euro 3.7 million (2009: euro 3.8 million). Pension obligations to former members of the Board of Management and their dependants are fully covered by pension provisions amounting to euro 49.7 million (2009: euro 46.7 million), computed in accordance with IAS Compensation of the Supervisory Board Responsibilities, regulation pursuant to Articles of Incorporation The compensation of the Supervisory Board is determined by shareholders resolution at the Annual General Meeting. The compensation regulation valid for the financial year 2010 was resolved by shareholders at the Annual General Meeting on 8 May 2008 and is set out in Article 15 of BMW AG s Articles of Incorporation, which can be viewed and /or downloaded at under the menu items Corporate Facts and Corporate Governance. Compensation principles, compensation components The Supervisory Board of BMW AG receives both fixed and corporate performance-related compensation. Earnings per share of common stock form the basis for corporate performance-related compensation. Each member of the Supervisory Board receives, in addition to the reimbursement of expenses, a fixed amount of euro 55,000 (payable at the end of the year) as well as a corporate performance-related compensation of euro 220 for each full euro 0.01 by which the earnings per share (EPS) of common stock reported in the Group Financial Statements for the relevant financial year (remuneration year) exceed a minimum amount of euro 2.30 (payable after the Annual General Meeting held in the following year). An upper limit of euro 110,000 is in place for the performance-related compensation. With this combination of fixed and corporate performance-related compensation, the compensation structure in place for BMW AG s Supervisory Board complies with the recommendation contained in section of the German Corporate Governance Code. The German Corporate Governance Code also recommends that the exercising of chair and deputy chair positions in the Supervisory Board as well the chair and membership of committees should also be considered when determining the level of compensation. Accordingly, the Articles of Incorporation of BMW AG stipulate that the Chairman of the Supervisory Board shall receive three times the amount and each Deputy Chairman shall receive twice the amount of the remuneration of a Supervisory Board member. Provided the relevant committee convened for meetings on at least three days during the financial year, each chairman of the Supervisory Board s committees receives twice the

7 amount and each member of a committee receives one and a half times the amount of the remuneration of a Supervisory Board member. If a member of the Supervisory Board exercises more than one of the functions referred to above, the compensation is measured only on the basis of the function which is remunerated with the highest amount, thus avoiding amounts accumulating when more than one function is exercised. In addition, each member of the Supervisory Board receives an attendance fee of euro 2,000 for each full meeting of the Supervisory Board (Plenum) which the member has attended (payable at the end of the financial year). Attendance at more than one meeting on the same day is not remunerated separately. The Company also reimburses to each member of the Supervisory Board any value added tax arising on their remuneration. The amounts disclosed below are net amounts. In order to be able to perform his duties, the Chairman of the Supervisory Board is provided with secretariat and chauffeur services. Compensation of the Supervisory Board for the financial year 2010 (total) In accordance with Article 15 of the Articles of Incorporation, the compensation of the Supervisory Board for activities during the financial year 2010 amounted to euro 3.1 million (2009: euro 1.6 million). This comprised a fixed component of euro 1.6 million (2009: euro 1.6 million) and a variable component of euro 1.5 million (2009: ), reflecting the fact that the relevant criteria stipulated in the Articles of Incorporation were satisfied again for the first time in two years (minimum EPS of euro 2.30). in euro million Amount Proportion Amount Proportion in % in % Fixed compensation Variable compensation Total compensation Supervisory Board members did not receive any further compensation or benefits from the BMW Group for services performed by them, in particular advisory and agency services. Market research into the premium segment for cars in Germany, for which the Institut für Demoskopie Allensbach had been engaged in 2009, was completed in 2010 as agreed. Of the total fee of euro 79,600, the final instalment of euro 26,533 was incurred in Since Prof. Dr. Renate Köcher is a member of BMW AG s Supervisory Board and a Director of the Allensbach Institute, the Board of Management obtained approval for the contract from the Supervisory Board s Personnel Committee in 2009 prior to signing the contract.

8 Compensation of the individual members of the Supervisory Board for the financial year 2010 (2009) in euro Fixed compensation Attendance fee Variable Total 4 compensation Joachim Milberg (Chairman) 165,000 10, , ,260 (165,000) (10,000) ( ) (175,000) Manfred Schoch (Deputy Chairman) 110,000 10, , ,840 (110,000) (10,000) ( ) (120,000) Stefan Quandt (Deputy Chairman) 110,000 10, , ,840 (110,000) (10,000) ( ) (120,000) Stefan Schmid (Deputy Chairman) 110,000 10, , ,840 (110,000) (10,000) ( ) (120,000) Jürgen Strube (Deputy Chairman) 1 41,589 2,000 43,419 87,008 (110,000) (10,000) ( ) (120,000) Karl-Ludwig Kley (Deputy Chairman 2 ) 89,356 10,000 93, ,644 (55,000) (8,000) ( ) (63,000) Bertin Eichler 55,000 10,000 57, ,420 Franz Haniel 55,000 10,000 57, ,420 (55,000) (8,000) ( ) (63,000) Reinhard Hüttl 55,000 8,000 57, ,420 Henning Kagermann 3 34,356 6,000 35,868 76,224 ( ) ( ) ( ) ( ) Susanne Klatten 55,000 10,000 57, ,420 Renate Köcher 55,000 10,000 57, ,420 Robert W. Lane 55,000 10,000 57, ,420 (34,959) (6,000) ( ) (40,959) Horst Lischka 55,000 10,000 57, ,420 (34,959) (8,000) ( ) (42,959) Willibald Löw 55,000 10,000 57, ,420 Wolfgang Mayrhuber 55,000 6,000 57, ,420 (55,000) (8,000) ( ) (63,000) Werner Neugebauer 55,000 4,000 57, ,420 (55,000) (8,000) ( ) (63,000) Franz Oberländer 55,000 8,000 57, ,420 (55,000) (4,000) ( ) (59,000) Anton Ruf 55,000 10,000 57, ,420 Maria Schmidt 55,000 10,000 57, ,420 Werner Zierer 55,000 10,000 57, ,420 Total 1,430, ,000 1,493,235 3,107,536 (1,430,302) (184,000) ( ) (1,614,302) 1 Member and Deputy Chairman of the Supervisory Board until 18 May Deputy Chairman of the Supervisory Board since 18 May Member of the Supervisory Board since 18 May Figures for the previous year include the remuneration of members of the Supervisory Board who left office during the financial year Other No advances or loans were granted by the Company to Members of the Board of Management and the Supervisory Board, nor were any contingent liabilities entered into on their behalf.